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Geopolitics

18 July 2016 by lberuti

Since Thursday night, markets have had to cope with the tragic events in Nice and Turkey. Whilst both disturbing, events in Turkey had the most potential to be a major macro event. The apparent quick resolution of the attempted coup on Friday night will probably be enough to limit its impact though. In late trading on Friday, the Turkish lira was down in excess of 5% against the dollar, its biggest decline since the financial crisis in 2008. At the end of today’s session, the lira’s fall was limited to slightly more than 2% since just before the coup emerged, with the crackdown on those involved well under way. In creditland, while indices felt a tad weak, moves were minimal. There was some action on TURKEY’s CDS though, which is among the most liquid sovereign names. Unsurprisingly, TURKEY’s 5 year risk premium was under pressure. It opened 20bps wider right out of the gate, and spent the day wrapped around 250bps.